The Dollar index – which compares the USD against a basket of major partner currencies – ended August 4 in Vietnam time down 0.338% to 106.110, of which the euro gained 0.35% to $1.02. The Japanese yen rose 0.40% against the greenback to 133.32 JPY/USD.
The market temporarily ignored the ‘hawk’ messages of the US Federal Reserve (Fed) to focus on watching US jobs data – forecast to reach highs, putting downward pressure on the VND. USD, despite the pessimism about the risk of a prolonged economic recession.
The number of Americans filing for unemployment benefits increased over the past week, while the US trade deficit in June narrowed with exports rising to a record high – a trend that could see trade continue to close. contributed significantly to the country’s gross domestic product in the third quarter.
“There’s a sentiment in the markets right now that we know what to expect under tight monetary conditions,” said Juan Perez, director of trading at Monex USA in Washington. Investors are taking the view that “any recession we are facing in the next few months will be short-lived.”
Fed officials continue to deny the notion that US interest rates are close to peaking. San Francisco Fed President Mary Daly and Minneapolis Fed President Neel Kashkari said the Fed remained determined to contain high inflation.
However, the effects on the USD from those rhetoric by Fed officials are fading. Investors are still more confident in their own judgments based on US economic data, the most recent will be employment data.
Investors will have a “snapshot” of the state of the US economy after the Labor Department reports July jobs data on Friday. Signs that the US jobs market continues to be strong will likely bolster expectations that the Fed will continue to reveal aggressive monetary policy tightening.
Francesco Pesole, currency strategist at ING, said: “Yesterday we saw some ‘hawkish’ comments, but perhaps that wasn’t enough and investors will be looking for confirmation. from the data, especially tomorrow’s employment figures”. “The impact on the dollar is fading today. Risk sentiment is also more upbeat and the market doesn’t seem too worried about Taiwan.”
The results of a Reuters poll released on August 4 showed that the strength of the dollar has not yet peaked. Among those polled, 70% think the dollar still has room to rise further in this cycle, even after hitting a two-decade high in July.
Currently, the market thinks that the Fed will raise interest rates by 50 basis points in the next meeting in September, and do not rule out the possibility of a 75 basis point increase (44% of this possibility). The Fed raised interest rates by 75 basis points in both its June and July meetings.
Update rates of major currencies.
The British pound sterling ended August 4, Vietnam time, down 0.22% to $1.2116, despite the Bank of England (BoE) raising interest rates by the most since 1995, as the BoE warned. warned that a protracted recession was coming, with inflation reaching 13%. Earlier, when the BoE had not yet announced a decision to raise interest rates, the pound rose 0.3% to 1.2184.
At its meeting on Thursday (August 4), the BOE decided to raise interest rates by 50 basis points, to 1.75% – the sixth rate hike since December 2021 and the strongest one. over the past 27 years, bringing UK interest rates to their highest level since late 2008, in an attempt to tackle rising costs of living, despite fears that the economy is headed for a recession.
Inflation in the UK rose to 9.4% in June 2022 and is forecast to reach 13% by the end of the year when the economy may enter a recession. The BOE’s drastic move to raise interest rates has brought the bank’s monetary tightening trajectory closer to the trend set by the Fed and the European Central Bank (ECB) as the two agencies have raised interest rates. respectively 0.75 and 0.5 percentage points in the past July.
The BoE raised interest rates by the most since 1995.
In Asia, the Chinese yuan rose on Tuesday, although gains were hampered by concerns about tensions between China and the United States.
On the spot market, the local yuan on August 4 gained 27 pips to 6,7570 CNY.
In the crypto market, Bitcoin, as expected, continued to fluctuate wildly amid similar developments in high-risk assets.
At the end of the session 4/8 Vietnam time, Bitcoin was priced at 22,906 USD.
Bitcoin price on 4/8.
Notably, gold prices rose more than 1% to hit a one-month high as the dollar retreated and U.S. bond yields fell as investors kept a close eye on US-China tensions.
At the end of August 8 in Vietnam time, spot gold price increased 1.1% to $1,784.70 an ounce, before jumping to the highest level since July 5. Gold futures for December also rose 1.5% to $1,803.50 an ounce.
“At the end of the year, yields are falling slightly, along with the recent weakness in the dollar, one of the key factors in favor of gold,” said David Meger, director of metals trading at High Ridge Futures. .
The dollar’s retracement strengthened gold’s appeal to overseas buyers, while falling US Treasury bond yields reduced the opportunity cost of holding bullion. capital is not profitable.
“We’ve seen some rising tensions between the US and China, which is an additional reason why gold is being actively supported,” Meger added.
References: Refinitiv, Coindesk
Source: Vietnam Insider